Goldman Sachs’ CEO says the real test for Uber is how it does over time

Goldman Sachs CEO David Solomon thinks Uber will be just fine despite its less-than-stellar post-IPO performance since it went public in May. It just needs a little time, just like Facebook and Google did after they first went public.

The fact that “for five minutes in time, Uber went public and it’s trading a little bit below its IPO,” is the wrong way to look at the ride-sharing company’s performance, Solomon told Recode’s Kara Swisher and Teddy Schleifer at the 2019 Code Conference in Scottsdale, Arizona, on Tuesday. “We’ve been an investor in Uber for a long time and we’ve done very well. Maybe that’s the lens that we should be looking through,” he said.

Solomon, who became CEO of Goldman Sachs last fall and has been with the megabank since 1999, said he has confidence in Uber CEO Dara Khosrowshahi and his ability to find ways for the company to build value in the years to come. “He stepped into a very, very complicated platform and a very, very young company ... where there was a lot of change,” Solomon said.

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Khosrowshahi became Uber CEO in August 2017 after former chief executive Travis Kalanick was pressured to resign amid a cascade of scandals and growing questions about his leadership capabilities.

It’s easy to see why Uber has been a good investment for Goldman and Solomon, who on Tuesday revealed he had been an early private investor in Uber as well. Goldman Sachs invested in Uber in 2015, and its clients were reportedly on track to make $1 billion out of its May IPO.

“The test in all these things is how you do over time, and, you know, this is an incredible platform, it’s built a very big brand in a very short period of time. It’s got its hands in a lot of different businesses, and the execution risk will now be seen,” Solomon said.

Schleifer asked Solomon if, more broadly, he thinks there may be a tech bubble on the horizon. Solomon acknowledged that investors are willing to take more risk now than they have been at other points in time — but he said we’re not living in the dot-com bubble from two decades ago and that these risks extend beyond the tech sector.

“Silicon Valley is a reflection of what’s happening with capital and money all over the world. We have the most extraordinary push of monetary policy in the history of the world, and with interest rates basically zero all over the world, it’s not surprising that people move out on the risk curve and people look for more risk assets,” Solomon said. “I think people are looking for returns in an environment where riskless returns are basically zero or negative, even, in a lot of places. And so I think there are places where people are out the risk curve in Silicon Valley and places where they’re not, but I think all of this is a function of the fact that we’ve been through a long cycle of risk-on.”

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